Qantas to resume flights after government intervenes in dispute

left

right

Electronic screens display cancelled Qantas Airline flights as security officers look on at Los Angeles International Airport in California, October 29, 2011. Qantas said on Sunday it had cancelled 447 flights affecting more than 68,000 passengers since grounding more than 100 aircraft around the world on Saturday.
REUTERS/Jason Redmond

1/6

left

right

A stranded Qantas passenger waits for assistance at the Qantas Airlines counter at Hong Kong International Airport October 30, 2011.
REUTERS/Tyrone Siu

2/6

left

right

A Qantas plane is seen grounded among smaller aircrafts at Perth international airport October 29, 2011.
REUTERS/Daniel Munoz

3/6

left

right

Stranded Qantas passengers line up as they seek information at the check-in counters after their flights were cancelled at Singapore Changi Airport October 29, 2011.
REUTERS/Tim Chong

4/6

left

right

A Qantas plane taxis in front of the control tower at Sydney's airport August 24, 2011.
REUTERS/Daniel Munoz

5/6

left

right

Qantas Airways flight QF31, an Airbus A380 bound for Singapore and London, takes off from Sydney airport in this November 27, 2010 file photo.
REUTERS/Tim Wimborne/Files

MELBOURNE/SYDNEY An Australian tribunal ordered Qantas Airways on Monday to put its planes back into the air, intervening in the nation's most dramatic labor dispute in a decade after the national carrier grounded its entire global fleet.

Qantas had taken the drastic step at the weekend to ground all flights, disrupting nearly 70,000 passengers and bringing to a head a bitter battle with trade unions over pay, working conditions and its plan to base more operations in Asia.

Qantas's action succeeded in forcing the government to step in and to demand the tribunal make an urgent ruling on the dispute, which had been bleeding a business that carries about a fifth of Australia's international passengers.

Qantas said flights could resume as early as Monday afternoon, on a limited schedule and subject to regulatory clearance. The airline hoped to return to normal in 24 hours.

"We are pleased that after 24 hours of turmoil that common sense will be restored to the aviation and tourism sectors of Australia," Assistant Treasurer Bill Shorten said after the independent labor tribunal, Fair Work Australia, ordered the end to hostilities in the early hours of Monday morning.

The tribunal ordered Qantas and its unions to end all industrial action and resolve the dispute within 21 days or face a binding arbitration decision.

Qantas shares jumped nearly 6 percent as investors welcomed the tribunal's ban on further industrial action, though the stock has lost more than a third of its value this year.

"Customers can now make bookings with confidence on Qantas...because nobody any more can take industrial action," a bleary-eyed Qantas Chief Executive Alan Joyce told reporters after a weekend of round-the-clock drama.

But with 108 aircraft grounded, almost 500 flights canceled and Australia's tourism image tarnished in a single weekend, Prime Minister Julia Gillard was left fuming at Qantas's tactic which was aimed at forcing her to intervene.

"I believe Qantas took an extreme approach on Saturday," Gillard told Channel Seven TV on Monday. "With very little notice to government or passengers, it grounded planes. It did that in circumstances where it had other options."

The dispute has dogged Qantas for months but it escalated recently when it announced plans to cut 1,000 jobs and order $9 billion worth of new aircraft as part of a makeover to salvage its loss-making international business.

The airline made a pre-tax profit of $552 million in the year to June 30.

Union representatives said they would work with Qantas to resume flights as soon as possible but some of them sought to cast Joyce as a reckless manager prepared to crash the airline rather than seek a negotiated settlement.

"The board should immediately sack their out-of-control CEO," said Captain Richard Woodward, vice president of the Australian and International Pilots Association. He described Joyce's behavior as "megalomaniacal."

The grounding angered stranded passengers and the government, overshadowing Prime Minister Gillard's hosting of a summit of Commonwealth leaders in the western city of Perth.

On Sunday, Gillard said she had intervened because of concerns about damage to the economy and had called on the airline and union to quickly end the industrial action.

Almost 20 leaders at the summit had been booked to fly out with Qantas, but Gillard said most had made alternate flight plans.

BOLD, UNBELIEVABLE DECISION

Qantas CEO Joyce had estimated the grounding of the fleet would cost the airline about A$20 million ($21.4 million) a day, but he presented it on Monday as a successful tactic to end months of rolling strikes and to force a conclusion.

"That was the only way we could bring that to a head," he said.

The tribunal deliberated for more than 12 hours over the weekend as lawyers for the airline, union and government questioned executives and advisers and made submissions.

Qantas said a series of rolling stoppages by unions had cost the airline almost A$70 million since September and driven down bookings, threatening its survival.

The Qantas dispute is the latest in a tide of industrial unrest as unions press for a greater share of profits amid tight labor markets and high commodity prices.

It had threatened to become the most significant disruption to Australian aviation since a six-month 1989 dispute forced the government to use the airforce to keep flights running. Strikes by engineers cost Qantas around A$130 million in 2008.

MASSIVE DISRUPTIONS

Qantas airline, which usually flies more than 60,000 people a day, has been paying for accommodation and expenses for stranded travellers over the weekend and arranging on alternative flights.

Australian rival Virgin Australia said earlier it was adding 3,000 seats on its domestic network on Monday, in addition to 3,500 seats on Sunday.

Virgin Australia's airline partners Abu Dhabi's Etihad Airways and Air New Zealand said they were looking at options to increase capacity to and within Australia.

Qantas' decision left many passengers venting their anger after they were stranded in 22 cities around the globe.

"To resolve this at the expense of paying customers on one of the biggest flying days in Australia is quite frankly ... bizarre, unwarranted and unfair to the loyal customers that Australia has," a businessman, who gave his name only as Barry, told Sky TV at Melbourne airport.

This weekend is one of Australia's busiest for travel, with tens of thousands traveling to the hugely popular Melbourne Cup horse race on Tuesday, dubbed "the race that stops the nation."

(Additional reporting by Narayanan Somasundaram and Ed Davies in SYDNEY, Rebekah Kebede and Michael Perry in PERTH, James Grubel in CANBERRA, Praveen Menon in DUBAI; Editing by Neil Fullick)

Next In Aerospace & Defense

American Airlines Group Inc said higher average fares per mile have boosted its revenue and profit expectations for the fourth quarter, a day after rival United Continental Holdings Inc also raised forecasts.

FRANKFURT/ZURICH Swiss aircraft manufacturer Pilatus Aircraft is considering listing its shares in an initial public offering next year which could value the firm at around 3 billion Swiss francs ($2.95 billion), according to two sources familiar with the matter.

FRANKFURT German pilots' union Vereinigung Cockpit said it would resume wage talks with Lufthansa next week and hold back on further strikes during negotiations, offering some pre-Christmas respite to passengers and the airline.

Reuters is the news and media division of Thomson Reuters. Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Learn more about Thomson Reuters products: